How Broad Was Fraud?

While UW Medical was ripping off Medicare, say whistle-blowers, private insurers and patients were overbilled, too.

It's the elephant in the hospital room. As a belated internal review gets under way into the costly, five-year University of Washington Medicare-fraud scandal, a key question is unanswered: Did the university, which paid $35 million this month to settle a civil claim of falsely billing the U.S. government for medical reimbursements, also systematically overbill private health insurers, as a whistle-blower now claims? And were individual patients, as well, hit with inflated bills that caused personal financial hardships, as another whistle-blower says?

UW dental school professor Ken Landry says he encountered overbilling at Harborview Medical Center when his wife was being treated there.

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The university won't say whether it has reviewed its files to determine if there was a pattern of private overbilling similar to the fraudulent Medicare billing. Private insurance payments to UW generate revenue similar to that of Medicare and Medicaid, according to the state Department of Health. In 2003, UW Medical Center, for example, earned around $225 million in U.S. Medicare/Medicaid reimbursements and $207 million from "other payers"—principally, private insurers, HMOs, and self-paying patients.

It turns out that allegations of private overbilling have been part of the UW medical probe from the beginning, accord‑ ing to little-noticed court statements and UW whistle-blower Mark Erickson, who says cheating was "across the board," whether the government or private carriers paid the bills.

A U.S. plea agreement in one case—the felony conviction of UW doctor William Couser—says that "false claims for professional services were submitted to government sponsored health care benefit programs including Medicare, Medicaid, and Tricare, and private sponsored health care benefit programs." Couser, the only person criminally convicted of fraudulent billing in the scandal, pleaded guilty not to defrauding Medicare but to fraudulently billing a private carrier, Premera, by using the U.S. mail. The other convicted doctor, brain surgeon Richard Winn, was accused of fraud but pleaded guilty to obstructing the investigation.

A UW kidney specialist, Couser admitted in federal court last year to a single felony charge of billing the private insurer $124 for a 1996 dialysis treatment at which he wasn't present. A federal plea agreement, for which, in return, other charges of fraudulent billing were dropped, states that Couser falsely wrote in the notes section of a dialysis log that his patient was "seen and examined" by him. As a result, federal prosecutors said, "a false claim was submitted to Premera, a private/nongovernment sponsored insurer."

Premera, like other private carriers, contracts with the U.S. to administer Medicare billing for the government. But prosecutors did not specify whether the dialysis billing was paid by Medicare or Premera, saying only that the check came "from Premera." (The U.S. attorney's office in Seattle refused to elaborate last week.) Documents indicate that the billing became a federal offense only because the check was sent by U.S. mail to the university's billing group, UW Physicians (UWP).

Asked if UW thinks Couser's $124 billing was the only instance of private insurance billing fraud since 1996, UW Medicine spokesperson Tina Mankowski last week said she "couldn't speculate on that," and she wouldn't say if UW had reviewed its records for other inflated private billings. "What I can say is that billing errors do occur, and it is our position to do everything possible to prevent them from occurring," she said.

Couser was given five years probation and ordered to pay $100,000 in restitution—a tab the university picked up for him, as it did in the case of $500,000 in fraudulent billing Winn was ordered to pay back. Earlier news accounts characterized Couser's restitution as a penalty for defrauding the government, but a closer reading of the agreement makes clear the money was also for cheating private health insurers.

If that comes as a surprise to some, it's almost a shock to Premera. "Frankly," spokesperson Chris Jarvis said last week, "we are unaware of the particular charge you're referring to . . . nor have we been notified by authorities of any alleged fraudulent claims filed with Premera by Dr. Couser." Jarvis said he had not read the plea agreement.

Premera's clients obtain both Medicare and privately insured medical services from the UW; like Medicare, Premera also audits and scrutinizes billing and rejects improper charges. Asked if Premera had rejected any UW claims for overbilling, or if there had been a pattern of overbilling, Jarvis said the insurer doesn't comment "on ongoing fraud investigations, nor what actions we might take as a result of those investigations."

Couser's plea does not state how the $100,000 restitution was distributed among government and private carriers. In Winn's case, the plea agreement specifically names only government medical providers as victims. The U.S. attorney's office declined last week to say whether extensive private overbilling was part of their probe. "We're not in a position to comment on the reach of the investigation," said spokesperson Emily Langlie.

In court, prosecutors described a far-ranging system of Medicare fraud that thrived on "up-coding" for services—in essence, charging for more expensive procedures that weren't done at the UW Medical Center, Harborview Medical Center (run by the UW), Children's Hospital and Medical Center (aligned with the UW), and a chain of UW neighborhood clinics. Federal prosecutors also joined in supporting a False Claims Act lawsuit filed by whistle-blower Erickson that laid out those claims and was the cornerstone of the Medicare probe.

Erickson, who earned around $7 million from his whistle-blower's suit, told Seattle Weekly the "fraud was committed across the board" against government and private carriers alike during the time he worked for UWP and Children's University Medical Group (CUMG). As with Medicare, up-coding was the key.

His federal lawsuit, which focused on Medicare fraud, implicitly "outlines a number of these schemes" that were used on private billers, Erickson says, "and they were enacted in most instances without any knowledge of whom the patients' insurance companies were, whether they be federal or private."

UW denies that claim, suggesting any overbilling was a routine mistake. "Billing errors to private payers and payment errors by private payers are resolved in the ordinary course of interacting with the payers," said UW Medicine spokesperson Mankowski. "UWP and CUMG have active programs in place to minimize reimbursement errors and to identify and correct payment errors that occur."

Often, says whistle-blower Erickson, if UW's billing office was "having documentation created and backdated that was more than six months old, we were instructed to flag the charges as 'insurance only.' By doing so, a bill was generated for the insurance companies only, and the patient would never see this late charge being added." The insurance company thus would end up paying more than required.

Meanwhile, patients who faced overbilling without insurance company involvement were at more of a disadvantage. Those who requested itemized bills had a fighting chance but were confronted by an esoteric list of charges and their inability to really know if a procedure, medication, or service was truly needed. (Fifty percent of the 40,000 personal bankruptcies in the state last year were the result of medical debt, the Working for Health Coalition reported last week). Ken Landry, a UW dental school professor who retired last year, thanks his professional wisdom for saving him money after he and his private insurer, Regence BlueShield, were double-billed for $1,500 in charges by the UW for medical services related to his wife's 1997 head injury. "It appeared to me that any neurology resident or faculty [member] who set foot in her ICU room during the two days she was held at Harborview was entitled to charge Regence for a visit," he says. Fortunately, "As a health care provider, I have a good understanding of how the treatment provider system and the insurance business works," and he avoided paying those costs.

One of whistle-blower Erickson's former co-workers, Swannee Rivers, agrees that private overbilling was not uncommon at UWP. She says she occasionally had to face patients with private or no insurance, who were hit with large bills that might have been inflated. "I have witnessed people using their last cents to pay erroneous charges," she says. "People have come in sharing the fact they had lost homes behind these bills. I still feel nauseous thinking about the many faces I have been confronted by through the years." It was because of a pattern of such overbilling that she resigned in 1995, she says (see "Everybody Knew," June 9).

UW Medical School Dean Paul Ramsey, who calls the "vast majority" of Medicare overbilling "unintentional mistakes," has launched a review "to determine lessons to be learned from the investigation and identify the additional steps we must take to ensure that we do not repeat the mistakes of the past." He so far has not said whether it will include a look at private billing. Both Seattle daily newspapers last week editorially urged Ramsey's review committee to do a complete and transparent probe of the scandal, including a look at Ramsey's role. The Seattle Times also called for Ramsey's resignation.